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How to Buy Penny Stocks

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Penny Stocks sind Aktien mit einem niedrigen Kurswert. Die Papiere gelten als hoch spekulativ, da bereits bei geringen Kursschwankungen ein hoher Verlust möglich ist. Penny Stocks sind riskant, doch chancenreich. Anleger können schon mit niedrigen Einsätzen auf steigende Kurse setzen. Worauf Sie bei der Anlage achten sollten.

Conclusion

Such stocks present a high risk for investors, who are often lured by the hope of large and quick profits. Another problem with the penny stock market is that it has little liquidity , so holders of shares in penny stock companies often find it difficult for them to cash out of positions. Many penny stocks, particularly those that trade for fractions of a cent, are thinly traded. They can become the target of stock promoters and manipulators.

This is referred to as a " pump and dump " [8] scheme. The pump and dump is a form of microcap stock fraud. In more sophisticated versions of the fraud, individuals or organizations buy millions of shares, then use newsletter websites, chat rooms , stock message boards , fake press releases, or e-mail blasts to drive up interest in the stock.

When buying pressure pushes the share price up, the rise in price entices more people to believe the hype and to buy shares as well. Eventually the manipulators doing the "pumping" end up "dumping," when they sell their holdings. The expanding use of the Internet and personal communication devices has made penny stock scams easier to perpetrate. The Mafia had infiltrated Wall Street by the s. Mob activity on Wall Street reportedly increased in the s.

On February 10, , The New York Times reported that "Mafia crime families are switching increasingly to white collar crimes " with a focus on "small Wall Street brokerage houses. All three defendants pled guilty.

Another example of an activity that skirts the borderline between legitimate promotion and hype is the case of LEXG. The promotion drew upon the legitimate growth in production and use of lithium , while touting Lithium Exploration Group's position within that sector.

According to the company's December 31, form Q filed within months of the direct mail promotion , LEXG was a lithium company without assets. Its revenues and assets at that time were zero. The "pump and dump" tactic is also known as a supernova and, unlike regular stocks, penny stocks usually move on momentum of the price action.

Goldmen, and Hanover Sterling. In the United States, regulators have defined a penny stock as a security that meets a number of specific standards. The criteria include price, market capitalization , and minimum shareholder equity. Securities traded on a national stock exchange , regardless of price, are exempt from regulatory designation as a penny stock, [21] since it is thought that exchange-traded securities are less vulnerable to manipulation.

The State of Georgia was the first state to codify a comprehensive penny stock securities law. Morton , the only stockbroker in the Georgia General Assembly at the time, was principal sponsor of the bill in the House of Representatives.

They are designed for investors who can withstand a high level of risk as the low price point is a tell-tale sign of bigger issues going on within the company. It could be anything from cash-flow issues to impending bankruptcy or fraud. You could also be dealing with a startup with little to no track record or a company with management woes.

Not sure where to start? Consider reaching out to a seasoned penny stock trader for guidance. They can serve as your mentor and help you avoid some of the same mistakes they made early on. When deciding on an amount, also consider the volatility of the industry the company is in. But be mindful that this could be the result of a short-lived fad and will put your investment at even more risk.

Still sold on penny stocks? Before you dive into the world of penny stock trading, there are some risks you should be aware of. The trading volume for penny stocks is relatively low because of their risky nature, so you may find it difficult to buy and sell at the most optimal times.

You also want to pay attention to the fees that brokers sometimes tack on to penny stock trades.

Benzinga's stocks of the month

Global Sweeteners Holdings LtdShs.

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